The fight between Ottawa and the provinces over the Canada Job Grant program may just be the opening salvo in a much larger battle.

Social Development Minister Jason Kenney said he’s frustrated that negotiations on the Canada Job Grant have “sucked the oxygen” out of the larger conversation of how to tackle the perceived skills gap in the country.

OTTAWA—The fight between Ottawa and the provinces over the Canada Job Grant program may just be the opening salvo in a much larger battle.

Employment and Social Development Minister Jason Kenney said the Conservatives want to have an “informed national dialogue” around skills development — including provincial decisions on post-secondary education funding.

“We recognize that education is an exclusive area of provincial jurisdiction, but I think as a major funder of post-secondary education we can certainly ask questions about how those investments are being made and how well linked they are to the labour market,” Kenney told the Star in an interview Thursday.

Kenney noted the federal government has agreed to raise the Canada Social Transfer, a major source of funding for Canada’s post-secondary institutions, by three per cent a year.

Meanwhile, Kenney said a number of institutions are telling him they find their provincial funding frozen or cut.

“So when a provincial labour market minister approaches me about the problem of skills shortages, I think it’s entirely reasonable for me to ask why are (increases in) CST transfers not being seen by the polytechnic institutes,” Kenney said.

While the minister did not suggest attaching strings to federal-provincial transfers, even hinting toward intervention in provincial decisions around post-secondary funding is a marked departure from the Conservatives’ approach to relations with the provinces and territories.

In 2011, Finance Minister Jim Flaherty presented the provinces with a new deal for the other major federal-provincial transfer, the Canada Health Transfer, with no strings attached. The transfer would continue to grow, albeit at a lower rate, with individual provinces responsible for their own decisions on how to tackle health.

But Kenney said he’s frustrated that the negotiations on the Canada Job Grant, which provinces have largely opposed, have “sucked the oxygen” out of the larger conversation of how to tackle the perceived skills gap in the country.

“My primary focus is on the broader skills agenda, which is bigger than the Job Grant,” Kenney said.

“(This is) one of the most important future economic issues. And yet there has been very little collaboration on a wide spectrum of issues.”

Kenney said there’s more work to be done on a variety of issues: increasing labour mobility, knocking down credential recognition barriers among Canadian jurisdictions, accelerating credential recognition for immigrants, harmonizing apprenticeship systems between provinces, and addressing the larger education system.

But as that work proceeds, the deadline for an agreement on the Job Grant looms large. Provinces have complained that the proposed Job Grant system — which would split training funding three ways between Ottawa, provinces and employers — claws back millions from their coffers. They’ve given Kenney a counter-offer and asked for more time, but the 2014 federal budget tabled this week indicated Ottawa will go it alone should no agreement be in place on April 1.

Premier Kathleen Wynne told reporters Wednesday she’s hopes the two sides can come to an agreement by that date.

“It’s a very important program and I hope that we’re going to be able to have a situation where the federal government understands the kind of flexibility that the provinces need,” Wynne said. “If not, then that’s go to be, again, another problem where we are going to have to decide whether we step into a gap that has been left by the federal government.”

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